Eternal Faces INR 128 Cr GST Demand and Penalty Order from Uttar Pradesh Tax Authorities

The company that owns the Zomato and Blinkit brands, Eternal, announced on 19 October that the Uttar Pradesh tax authorities had issued a demand order for goods and services tax (GST) along with more than INR 128 crore in applicable interest and penalties. The Deputy Commissioner, State Tax, Lucknow, Uttar Pradesh, issued a demand order about the overuse of input tax credits and the underpayment of output taxes for the April 2023–March 2024 period, together with associated interest and penalties. Eternal stated that it will appeal the order to the proper authority since it feels it has a compelling argument on its grounds.

Eternal to Challenge the Order

The order was issued in accordance with Section 74 of the Central GST and Uttar Pradesh GST Acts, per the filings made with the BSE and National Stock Exchange. The corporation has been accused by the tax administration of underpaying output tax and overusing input tax credits. Eternal Limited declared in its disclosure that it would challenge the order and that it was confident in its legal position.

“The company will be appealing the order before the proper authority because we think we have a strong case on merits,” the business said. Investors were reassured by the food delivery and restaurant aggregator platform, which had previously changed its name from Zomato to Eternal Limited, that it does not anticipate any financial consequences from this event. This shows that the business is optimistic about getting a good result from the appeals process.

IT Department Putting a Scanner on E-Commerce

In order to ensure GST compliance, Indian tax officials have been closely monitoring e-commerce and service platforms at the time of the order. The large penalty amount, which is equivalent to the initial tax demand, is said to represent the authority’s assessment that the infraction was serious. The impact of this revelation on investor sentiment towards the company, which has been striving for consistent profitability in recent quarters, will be widely monitored by market analysts.